Question 1

If product Y is an inferior good, a decrease in consumer incomes will

Accepted Answer

A)  make buyers want to buy less of Product Y. 
B)  not affect the sales of product Y. 
C)  shift the demand curve for product Y to the left. 
D)  shift the demand curve for product Y to the right. 
A)  make buyers want to buy less of Product Y. 
B)  not affect the sales of product Y. 
C)  shift the demand curve for product Y to the left. 
D)  shift the demand curve for product Y to the right.

Question 2

A government-set price floor on a product

Accepted Answer

A)  does not interfere with the rationing function of price in a market system. 
B)  will drive resources away from the production of the product. 
C)  will attract more resources toward the production of the product. 
D)  is intended to benefit the buyers of the product. 
A)  does not interfere with the rationing function of price in a market system. 
B)  will drive resources away from the production of the product. 
C)  will attract more resources toward the production of the product. 
D)  is intended to benefit the buyers of the product.

Question 3

In markets where the supply curve is vertical, changes in

Accepted Answer

A)  demand will not cause the equilibrium price to change. 
B)  supply will not cause the equilibrium price to change. 
C)  demand will not cause the equilibrium quantity to change. 
D)  supply will not cause the equilibrium quantity to change. 
A)  demand will not cause the equilibrium price to change. 
B)  supply will not cause the equilibrium price to change. 
C)  demand will not cause the equilibrium quantity to change. 
D)  supply will not cause the equilibrium quantity to change.

Question 4

A government subsidy to the producers of a product

Accepted Answer

A)  reduces product supply. 
B)  increases product supply. 
C)  reduces product demand. 
D)  increases product demand. 
A)  reduces product supply. 
B)  increases product supply. 
C)  reduces product demand. 
D)  increases product demand.

Question 5

If the demand curve for product B shifts to the right as the price of product A declines, then

Accepted Answer

A)  both A and B are inferior goods. 
B)  A is a superior good and B is an inferior good. 
C)  A is an inferior good and B is a superior good. 
D)  A and B are complementary goods. 
A)  both A and B are inferior goods. 
B)  A is a superior good and B is an inferior good. 
C)  A is an inferior good and B is a superior good. 
D)  A and B are complementary goods.

Question 6

Assume that the graphs show a competitive market for the product stated in the question.     Select the graph above that best shows the change in the market specified in the following situation: the market for digital cameras, when the productivity of workers in the digital camera industry increases.

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D

Question 7

A price floor in a competitive market will result in persistent shortages of a product.

Accepted Answer

A) True 
 B)False

Question 8

When central planners in a command economy end up having a huge surplus of shoes and widespread shortages of bread in their economy, they have failed to attain

Accepted Answer

A)  productive efficiency. 
B)  allocative efficiency. 
C)  minimum opportunity costs. 
D)  maximum process and revenues. 
A)  productive efficiency. 
B)  allocative efficiency. 
C)  minimum opportunity costs. 
D)  maximum process and revenues.

Question 9

If the price of a product decreases, we would expect

Accepted Answer

A)  demand to increase. 
B)  quantity supplied to decrease. 
C)  supply to decrease. 
D)  quantity supplied to increase. 
A)  demand to increase. 
B)  quantity supplied to decrease. 
C)  supply to decrease. 
D)  quantity supplied to increase.

Question 10

Allocative efficiency is concerned with

Accepted Answer

A)  producing the combination of goods most desired by society. 
B)  achieving the full employment of all available resources. 
C)  producing every good with the least-cost combination of inputs. 
D)  reducing the concavity of the production possibilities curve. 
A)  producing the combination of goods most desired by society. 
B)  achieving the full employment of all available resources. 
C)  producing every good with the least-cost combination of inputs. 
D)  reducing the concavity of the production possibilities curve.

Question 11

In the foreign exchange market, if Canadian companies import more products from the U.S., then the demand for Canadian dollars will increase.

Accepted Answer

A) True 
 B)False

Question 12

A decrease in the demand for recreational fishing boats might be caused by an increase in the

Accepted Answer

A)  income of sports fishers. 
B)  price of outboard motors. 
C)  size and number of fish available. 
D)  price of sailing boats. 
A)  income of sports fishers. 
B)  price of outboard motors. 
C)  size and number of fish available. 
D)  price of sailing boats.

Question 13

Assume the demand curve for product X shifts to the right. This might be caused by

Accepted Answer

A)  a decline in income if X is an inferior good. 
B)  a decline in the price of Z if X and Z are substitute goods. 
C)  a change in consumer tastes that is unfavorable to X. 
D)  an increase in the price of Y if X and Y are complementary goods. 
A)  a decline in income if X is an inferior good. 
B)  a decline in the price of Z if X and Z are substitute goods. 
C)  a change in consumer tastes that is unfavorable to X. 
D)  an increase in the price of Y if X and Y are complementary goods.

Question 14

All of the following would affect the position of the supply curve for cranberries, except the

Accepted Answer

A)  popularity of cranberry drinks. 
B)  price of agricultural land for cranberries. 
C)  cost of fertilizers for cranberry production. 
D)  development of a new pest control for cranberries. 
A)  popularity of cranberry drinks. 
B)  price of agricultural land for cranberries. 
C)  cost of fertilizers for cranberry production. 
D)  development of a new pest control for cranberries.

Question 15

Assuming competitive markets with typical supply and demand curves, which of the following statements is correct?

Accepted Answer

A)  An increase in supply with a decrease in demand will result in an increase in price. 
B)  An increase in supply with no change in demand will result in an increase in price. 
C)  An increase in supply with no change in demand will result in a decline in sales. 
D)  An increase in demand with no change in supply will result in an increase in sales. 
A)  An increase in supply with a decrease in demand will result in an increase in price. 
B)  An increase in supply with no change in demand will result in an increase in price. 
C)  An increase in supply with no change in demand will result in a decline in sales. 
D)  An increase in demand with no change in supply will result in an increase in sales.

Question 16

Since their introduction, prices of Blu-ray players have fallen and the quantity purchased has increased. This statement

Accepted Answer

A)  suggests that the supply of Blu-ray players has increased. 
B)  suggests that the demand for Blu-ray players has increased. 
C)  constitutes an exception to the law of demand in that they suggest an upward-sloping demand curve. 
D)  constitutes an exception to the law of supply in that they suggest a downward-sloping supply curve. 
A)  suggests that the supply of Blu-ray players has increased. 
B)  suggests that the demand for Blu-ray players has increased. 
C)  constitutes an exception to the law of demand in that they suggest an upward-sloping demand curve. 
D)  constitutes an exception to the law of supply in that they suggest a downward-sloping supply curve.

Question 17

If demand increases and supply simultaneously decreases, equilibrium price will rise.

Accepted Answer

A) True 
 B)False

Question 18

In constructing a demand curve for product X,

Accepted Answer

A)  consumer preferences are allowed to vary. 
B)  the prices of other goods are assumed constant. 
C)  money incomes are allowed to vary. 
D)  the supply curve of product X is assumed constant. 
A)  consumer preferences are allowed to vary. 
B)  the prices of other goods are assumed constant. 
C)  money incomes are allowed to vary. 
D)  the supply curve of product X is assumed constant.

Question 19

All of the following are assumed to be constant when the supply curve for a product is drawn, except the

Accepted Answer

A)  price of the product. 
B)  production technology used by the firm. 
C)  number of producers. 
D)  price of inputs used to make the product. 
A)  price of the product. 
B)  production technology used by the firm. 
C)  number of producers. 
D)  price of inputs used to make the product.

Question 20

Assume that the demand curve for product C is downsloping. If the price of C falls from $2.00 to $1.75,

Accepted Answer

A)  a smaller quantity of C will be demanded. 
B)  a larger quantity of C will be demanded. 
C)  the demand for C will increase. 
D)  the demand for C will decrease. 
A)  a smaller quantity of C will be demanded. 
B)  a larger quantity of C will be demanded. 
C)  the demand for C will increase. 
D)  the demand for C will decrease.

Exam 3: Demand, Supply, and Market Equilibrium

If product Y is an inferior good, a decrease in consumer incomes will

A government-set price floor on a product

In markets where the supply curve is vertical, changes in

A government subsidy to the producers of a product

If the demand curve for product B shifts to the right as the price of product A declines, then

Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market specified in the following situation: the market for digital cameras, when the productivity of workers in the digital camera industry increases.

A price floor in a competitive market will result in persistent shortages of a product.

When central planners in a command economy end up having a huge surplus of shoes and widespread shortages of bread in their economy, they have failed to attain

If the price of a product decreases, we would expect

Allocative efficiency is concerned with

In the foreign exchange market, if Canadian companies import more products from the U.S., then the demand for Canadian dollars will increase.

A decrease in the demand for recreational fishing boats might be caused by an increase in the

Assume the demand curve for product X shifts to the right. This might be caused by

All of the following would affect the position of the supply curve for cranberries, except the

Assuming competitive markets with typical supply and demand curves, which of the following statements is correct?

Since their introduction, prices of Blu-ray players have fallen and the quantity purchased has increased. This statement

If demand increases and supply simultaneously decreases, equilibrium price will rise.

In constructing a demand curve for product X,

All of the following are assumed to be constant when the supply curve for a product is drawn, except the

Assume that the demand curve for product C is downsloping. If the price of C falls from $2.00 to $1.75,

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters